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The Liquidity of Refined Nickel Has Not Been Improved as the Supply was Affected By the Tight Downstream Raw Materials
Apr 18, 2022 14:29CST
Source:SMM
[SMM Morning Nickel Comments:The liquidity of refined nickel has not been improved as the supply was affected by the tight downstream raw materials] Last week, the LME nickel fluctuated slightly in the range of $32,400/mt to $33,300/mt. The liquidity has not been improved and the main reason is that the current LME nickel was still high. The high price made it difficult to implement the raw material contract priced in LME price, resulting in low willingness of enterprises to maintain value. Besides, some customers believe that even if the LME price returns to the normal level, the confidence of maintaining value will be affected, therefore, it is expected that the activity of LME is difficult to return to the usual. In addition, the supply of nickel sulphate was relatively tight.

Last week, the LME nickel fluctuated slightly in the range of $32,400/mt to $33,300/mt. The liquidity has not been improved and the main reason is that the current LME nickel was still high. The high price made it difficult to implement the raw material contract priced in LME price, resulting in low willingness of enterprises to maintain value. Besides, some customers believe that even if the LME price returns to the normal level, the confidence of maintaining value will be affected, therefore, it is expected that the activity of LME is difficult to return to the usual. In addition, the supply of nickel sulphate was relatively tight as a result of the short supply of raw materials. Whether the output of high-grade nickel matte could increase substantially is the key point that affects the supply to new energy sector and alleviates the supply tightness of nickel briquette. However, the current production of nickel matte has not yet met expectations. The SHFE nickel showed a upward trend last week, but the overall supply and demand of refined nickel continued to remain weak. The weak demand put pressure on the nickel price, while the tight supply gave strong support to the nickel price. So to sum up, the nickel prices have not returned to the fundamentals, and the supply and demand has not been improved. It is expected that SHFE nickel will maintain a shock trend next week. 

Refined nickel: Last week, the LME nickel fluctuated slightly in the range of $32,400/mt to $33,300/mt. The liquidity has not been improved and the main reason is that the current LME nickel was still high. The high price made it difficult to implement the raw material contract priced in LME price, resulting in low willingness of enterprises to maintain value. Besides, some customers believe that even if the LME price returns to the normal level, the confidence of maintaining value will be affected, therefore, it is expected that the activity of LME is difficult to return to the usual. In addition, the supply of nickel sulphate was relatively tight as a result of the short supply of raw materials. Whether the output of high-grade nickel matte could increase substantially is the key point that affects the supply to new energy sector and alleviates the supply tightness of nickel briquette. However, the current production of nickel matte has not yet met expectations. The weak demand put pressure on the nickel price, while the tight supply gave strong support to the nickel price. So to sum up, the nickel prices have not returned to the fundamentals, and the supply and demand has not been improved. It is expected that SHFE nickel will maintain a shock trend next week. It is expected that the SHFE nickel will move among 216,000-234,000 yuan/mt next week The LME nickel price will be among $31,500-33,900/mt. 

Last Friday, the average price of SMM 8-12% high-graded NPI was 1,625 yuan/mtu (ex-works, including tax), which was the same as that of a week ago. The average price of 10-14% Indonesia NPI was 1,645 yuan/mtu (including tax, delivery to ports), which dropped slightly. The average price of Indonesia NPI with a grade of 14% or above was 1,662.5 yuan/mtu (including tax, delivery to ports), flat from a week ago. On the whole, the prices of NPI remained high during the week, with little fluctuation. The mainstream transaction price in the market was about 1,650 yuan/mtu (ex-works, including tax). On the demand side, affected by the pandemic, the downstream demand for stainless steel was thinner, and the profit margin of steel mills was difficult to improve. As the acceptance of high-priced raw materials was limited, there was pressure on the upward room of NPI prices. However, the raw material inventory of steel mills was generally low, and mills purchased on rigid demand and had to accept the current prices. The supply side was also affected by the pandemic and had difficulties in production and transportation. The performance of NPI plants in north China was particularly greatly affected by the pandemic, so the supply of NPI was tight. Supported by the price spread, tight supply and the rising cost from high-priced nickel ore in the early stage, the NPI prices remained strong. In addition, the import window for refined nickel has not opened, hence the supply of refined nickel and FeNi was in short supply. The prices of high-grade NPI were higher as steel mills had greater demand for NPI, especially high-grade ones. It is expected that the mainstream prices of NPI will be flat with a narrow price range this week. 

Nickel sulphate: The prices of battery-grade nickel sulphate were 46,300-48,000 yuan/mt last Friday, up 150 yuan/mt on the week. Battery-grade nickel sulphate market fell into a stalemate again this week. The market inquiry and offer were less than last week. At present, the quotations of mainstream nickel salt manufacturers were still relatively strong, ranging among 47,000-48,000 yuan/mt, but the downstream acceptance was limited, leading to the deadlocked negotiations. Some nickel salt plants with higher costs decided to suspend production. So that the supply of nickel sulphate shrank obviously. At present, the production reduction scale of precursor plants was relatively large amid the reduction of ternary battery demand, leading to the weak supply and demand. However, the cost of some scrap manufacturers was still relatively low due to different raw material sources and pricing methods. So that a small number of transactions were in higher prices than expected. In addition, the price of MHP raw materials decreased to a certain extent last week, and the coefficient of some raw materials decreased to 86. Nickel sulphate had profit repair drive amid the tight supply. However, at present, it is difficult to greatly improve the price acceptance of nickel salt by precursors. The repair process may mainly be the concession of nickel salt raw material end. The short-term cost reduction has not yet met market expectations, so the prices may still be deadlocked this week. The price is expected to move between 46,000- 48,000 yuan/mt. 

Stainless steel: At present, due to the spread of the pandemic in various places, East Steel City, the largest stainless steel trading market in Wuxi, was locked down. Although the personnel can work normally, the trucks were still unable to enter the site for the moment, and the shipment of goods was disrupted. Moreover, the transportation process was more strict and cumbersome, which increased the time cost and labour cost of transportation to a certain extent and contained the transportation efficiency. In addition, at present, the transportation in Zhangjiagang area was limited due to the pandemic. Some sales persons rested at home, but the production was normal. At present, there was a sudden spread of the pandemic in Foshan last week, but it is gradually returning to normal. Hence the operation was relatively stable, the market sentiment has gradually warmed up as the market restrictions were less strict. In April, the supply was significantly reduced due to the pandemic and the shortage of imported nickel-based raw materials. On the demand side, after the panic aroused by the pandemic gradually dissipated, the current market prices also rebounded slightly. SMM believes that under the condition of weak supply and demand, the prices of stainless steel will remain stable.

Nickel

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